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Teaching hospital would fill a need in Gary, region

Fellowship Story Showcase

Teaching hospital would fill a need in Gary, region

Picture of Mark Taylor
Wednesday, February 23, 2011

Construction of a new teaching hospital in Gary may sound like a pipe dream. But it’s a pipe many area health and political leaders are still smoking.

The conversation begins like this: Wouldn’t it be wonderful if Methodist Hospitals and some unknown partners would build a replacement hospital in Gary close to the Indiana University Medical School-Northwest Campus near Interstate 94?

But the talk always ends the same way: Who would pay for it?

Yes, who would fund a 280- to 320- bed high-tech hospital with the latest machinery, staffed with top-notch specialists to teach and practice in a teaching facility offering Northwest Indiana its first Level I or Level II trauma center?

While Methodist is finally operating in the black after years of suffering severe financial losses, it cannot afford to float $300 million to $600 million in tax-exempt bonds to finance a new hospital and lacks the capital access to borrow it. The Indiana University School of Medicine doesn’t own hospitals and while it has expressed deep interest in participating in such a venture, it cannot bring hundreds of millions of dollars to the table. The state’s best financed health care system, Clarion Health, which changes its name in February to Indiana University Healthcare, declined to participate in the project for fear of being perceived as an interloper.

But State Rep. Charlie Brown, D-Gary, perhaps the project’s biggest backer, hasn’t given up the fight. Brown said such a facility could be financed with casino taxes, as Gary is home to two casinos. He has suggested creating a special taxing district similar to the one employed by Wishard Hospital in Indianapolis, a highly successful county-owned safety net urban hospital similar to Methodist that receives nearly $70 million annually from Marion County taxpayers.

Lake County officials, who are dealing with budget deficits and employee layoffs, have not embraced the idea. And Gary, which has laid off firefighters and city workers and is trying to avoid bankruptcy, cannot spare funds for the project.

There seems almost universal consensus that a new teaching hospital in Gary would improve health care quality, services and access not only in the Steel City, but throughout Northwest Indiana and could be the economic engine sparking a much-needed revival.

In June 2009 the Indiana Business Research Center, Indiana University’s Kelly School of Business and the IU Office of the Vice President for Engagement prepared a 51-page report exploring the need for a new teaching hospital in Gary located near the campus of Indiana University Northwest. IUN leadership expressed a need for greater capacity for students to perform clinical services. Interviews with area health care providers revealed an estimated 25 percent of Northwest Indiana residents leave the region for health care in Chicago or Indianapolis.

The report said public funding would be required to offset the enormous initial cost of constructing a new 280- to 320-bed acute-care teaching hospital, which would range from $380 million to $480 million. The report estimated the project would generate $4 million in annual taxes and would save employers and health plans between $150 million to $450 million annually of the $3 billion they currently pay for inpatient and outpatient hospital expenses for Lake County residents. Additionally, the teaching hospital would create an estimated 560 permanent new jobs, 1,200 jobs during the three-year construction phase and 630 jobs from spending on materials, equipment and construction.

The report assumes that the hospital would replace Methodist’s Northlake Campus in Gary.

The report found that 10.5 percent of Lake County residents alone received care in Cook County, Ill., and downstate Marion County medical treatments worth $428 million to Cook County and $60 million to Marion County. That’s more than enough, hospital supporters contend, to sustain a new teaching hospital.

Bill Stephan, IU Vice President for Engagement, led the study’s assessment and planning work. Stephan said the proposed teaching hospital offers an exciting vision. “Conceptually, many found merit in a new hospital in Gary supported by the IU School of Medicine. At the end of the day, I’m not surprised that it comes down to money. And when our state economy is flagging there are more and more difficult issues to address.”

“Rep. Brown has been enterprising in seeking funding options with private developers, the gaming industry, public agencies and bonding opportunities,” he said.  “State Sen. Charbonneau (a former Methodist CEO) has endorsed that vision and Northwest Indiana leadership remains interested in pursuing the hospital.”

Stephan said teaching hospital supporters approached Clarion Health and noted the statewide system already operates hospitals in Lafayette and LaPorte. But Clarian didn’t want to usurp Methodist’s traditional leadership role in Gary and declined.

“How is it that residents in this corner of the state, with more prematurely born babies and higher infant mortality rates than anyplace else in Indiana, have to travel 200 miles to Indianapolis to receive the kind of care they need?” Rep. Brown asked.

Brown said the emotional and financial tolls those journeys extract from local families are severe. “That’s why pediatricians and others have been sending those children to Chicago area teaching hospitals. But the state of Indiana complains that the care they need is available within the state and don’t want to export medical dollars out of state. They say that they’ll compensate those Chicago hospitals, but not at same Medicaid rates they pay in Indianapolis. They’re putting a lesser dollar value on lives of babies from our area by doing this. They don’t understand that you can’t break up a family for the baby to get well,” he said.

Brown said Methodist Hospitals need to partner with a larger health system with deeper pockets to make an academic medical center happen in Gary.

“I’m hopeful,” he predicted, “that within two to three years Methodist would see its need for future survival and agree to partner with a health system with greater financial resources, even though they’ve turned it around and gotten, at least temporarily, out of the red ink.”

Brown said the ongoing problem of physician shortages will continue to vex Methodist and hurt Gary citizens.

“If physicians don’t have offices in Gary, they won’t be admitting their patients to Methodist,” he explained. “We have to reverse that trend of Gary patients leaving the city for medical services. We wouldn’t have this problem if we had an academic medical center here.”

Methodist Hospitals President and CEO Ian McFadden said there is no immediate plan to build a new Methodist Hospital, regardless of whether it would be a teaching hospital collaboration with the IUN Medical School.

“Whether it is built next year, or in five years or whenever, we’re going to fulfill the region’s teaching hospital needs at Methodist,” McFadden said. “We already have some (medical resident programs) in place and will add to them. That’s always been a part of our mission. What’s preventing the building of a teaching hospital is simply money. It would cost $600 million to build and fully fund a 300-bed facility and that’s just getting it up and running. The state has not been willing to invest in it. We had a task force working with IUN and Rep. Charlie Brown that made some inroads. But once the state has clamped down on funding, that’s stalled everything. Even IUN is having funding issues. But we’re doing teaching programs regardless.”

Patrick Bankston, dean of the IU Medical School-Northwest in Gary, said the medical school is piloting a demonstration to expand its two-year program into a full four-year medical school.

“A teaching hospital has residents, which we don’t have yet at the medical school,” Bankston said. “Faculty members at a teaching hospital tend to keep their skills at the top of their game. Physicians are stimulated by the students to be the best they can be. In terms of patient care, teaching hospital patients can expect more attention, which would only increase the quality of care.”

He said having locally trained medical school graduates able to perform their residency requirements at the teaching hospital and other Northwest Indiana hospitals would mean more doctors remain here to set up practices.

Indiana Hospital Association President Doug Leonard cautioned that Methodist and IUN would face “huge obstacles” in constructing a new teaching hospital in Gary.

Leonard said Wishard is the only one of 34 county and municipal owned hospitals in the state to receive county funding, but he conceded its model has worked well.  “It would require IU or some bigger partner to jointly fund it and that’s unlikely, or they would need bonds based on potential revenues.”

Leonard said Parkview Hospital in Fort Wayne is constructing a new $900 million hospital campus that will include some teaching. “So it is possible,” he said.

Gary pediatrician Steve Simpson said he’s optimistic the state can assist Gary in building a new teaching hospital with the IU Medical School.

“Look at Indianapolis,” he said. “They have rebuilt the whole area into a giant medical complex. I feel this will happen to Gary. We have to bring something to replace the steel mills. There is a quiet revolution going on here. Methodist is hiring doctors. There is a great need for health care here. The number of doctors is down and the funds are limited and the state is cutting Medicaid at a time when we need it most. But I believe positive change is going to come.”